Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
Example calculation (clothing retailer)
Let’s assume that a small Canadian clothing retailer imports clothing from Asia and sells it online and in stores. The company does not manufacture anything itself. Rather, it contracts production and uses third-party logistics.
| Category | Activity | Data Input | Calculation |
| Purchased Goods & Services | 100,000 cotton t-shirts manufactured overseas | 2 kg CO₂e per shirt
|
100,000 × 2 = 200,000 kg CO₂e |
| Fuel- & Energy-related Activities | transmission & distribution losses from electricity use (100,000 kWh used, 7% loss) |
0.020 kg CO₂e per kWh |
100,000 × 7% × 0.020 = 140 kg CO₂e |
| Upstream Transportation & Distribution | ocean freight from China to Vancouver (10 containers) |
1,000 kg CO₂e per container | 10 × 1,000 = 10,000 kg CO₂e |
| Business Travel | employee flights (2 staff, 2 round-trips Toronto–Vancouver) | 2,000 kg CO₂e per round trip | 2 × 2 × 2,000 = 8,000 kg CO₂e |
| Employee Commuting | 10 employees, avg 30 km/day, 220 days/year, 0.2 kg/km | 0.2 kg CO2e per km | 10 × 30 × 220 × 0.2 = 13,200 kg CO₂e |
| Downstream Transportation | delivery of online orders (20,000 packages/year) | 0.5 kg CO₂e per package | 20,000 × 0.5 = 10,000 kg CO₂e |
| End-of-life Treatment | 5,000 t-shirts discarded in landfill | 0.5 kg CO₂e per shirt (end-of-life) |
5,000 × 0.5 = 2,500 kg CO₂e |
Challenges of Calculating Scope 3 Emissions for Small Businesses
Calculating Scope 3 emissions can be challenging, especially for small businesses. Here are some common challenges:
- Gathering accurate and comprehensive data from suppliers and other third parties can be difficult. Many small businesses may not have the resources or leverage to obtain detailed emissions data from their suppliers.
- Ensuring the quality and reliability of the data collected is another challenge. Inconsistent or incomplete data can lead to inaccurate emissions calculations.
- Small businesses often deal with complex supply chains involving multiple tiers of suppliers. Tracing emissions through these layers can be time-consuming and resource intensive.
- There is often a lack of standardized methodologies for calculating Scope 3 emissions, making it hard to compare and aggregate data across different suppliers and categories.
- Small businesses may lack the financial and human resources needed to invest in sophisticated tools and processes for measuring and managing Scope 3 emissions.
- Convincing suppliers to participate in emissions reporting and to provide accurate data can be challenging, especially if they are not familiar with sustainability practices.
Despite these challenges, starting with a focus on the most significant emission sources and gradually expanding the scope can help small businesses make meaningful progress.
